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Tag Archive: Department of Environmental Quality

Virginia Moves Forward with Carbon Cap and Trade Plan

But some uncertainties remain.

coal-fired plant in VirginiaOn Thursday, November 16, the Virginia State Air Pollution Control Board unanimously approved a draft rule designed to reduce carbon emissions from fossil generating facilities operating in the Commonwealth. The highly complex regulation, if implemented, would require Virginia generating facilities to participate in the Regional Greenhouse Gas Initiative (“RGGI”) trading system. The regulation will be administered by the Air Board and the Virginia Department of Environmental Quality (“DEQ”).

Following the publication of the rule, which is expected to occur in December or early January, 2018, there is a 60-day period in which the public and interested parties may provide comment on the rule. Following this public comment period, the Air Board would vote on the final rule in 2018.

The proposed rule would establish an initial statewide carbon cap of either 33 or 34 million tons, which represents the amount of carbon dioxide forecasted to be emitted in the Commonwealth in 2020. The carbon rule does not require generators to purchase emissions allowances from the Commonwealth in an auction, thus avoiding a state requirement that all revenue-raising measures must be approved by the General Assembly. Instead, generators will be freely allocated allowances, which they will thereafter consign to the RGGI auction.

Allowances purchased at the RGGI auction would no longer be conditional – meaning that generators will surrender these RGGI allowances to DEQ in order to cover their emissions. For each conditional allowance consigned to the auction, the generator will receive the clearing price of the auction. This allows generators to consign all of their conditional allowances but only purchase what they need.

Under the rule, therefore, utilities and other power plant operators would have an incentive to reduce emissions to avoid having to purchase additional allowances. Any unneeded emissions allowances must be sold in the RGGI trading system, with the proceeds credited to Virginia utility customers. However, the rule does not specify precisely how such proceeds would flow back to consumers.

The regulation would only apply to generation facilities that are 25 MW or larger in capacity. There are approximately 32 such facilities in Virginia that will be subject to the rule.

Between 2020 and 2030, the statewide carbon cap would be reduced by 3 percent each year, meaning that generating facilities would either need to reduce emissions or purchase additional emissions allowances.

The draft regulation represents the first time Virginia has attempted to regulate the amount of carbon that may be emitted by existing power plants. DEQ has regulated carbon emissions from new power plants since 2011.

Attorney General Mark Herring, in an official opinion issued in May, 2017, found that a carbon cap and trade program would be lawful. The Attorney General found that the Virginia State Air Pollution Control Board, under existing law, is “authorized to regulate ‘air pollution’” and to promulgate regulations “abating, controlling and prohibition air pollution.” Under Virginia law, “air pollution includes “substances which are or may be harmful or injurious to human health, welfare or safety, or to property.” The Attorney General also stated that “it is well settled that [greenhouse gases] fall within this definition.”

Virginia’s regulation will take the place of the federal Clean Power Plan, which is in the process of being repealed by the Environmental Protection Agency. Please contact one of our regulatory attorneys should you have questions about this draft rule.

Virginia Senate Asks for Solar Power Study

As a result of certain resolutions that were considered in this year’s General Assembly session, the Virginia State Senate requested that the Virginia Department of Mines, Minerals and Energy (DMME) and the Department of Environmental Quality (DEQ) study the costs and benefits of distributed solar power generation and net metering.

The DMME combined the required Stakeholder Group on Distributed Solar Energy and Net Metering with the Small Solar Working Group (SSWG), which was established in 2013 at the request of stakeholders and with DEQ Director David Paylor’s support. It is now comprised of about 50 representatives from the solar industry, utilities, conservation groups, local government, state agencies, and academia. The goal of the Stakeholder Group is informally and collaboratively to seek common ground in encouraging solar development in Virginia, in keeping with the Commonwealth’s energy policy.

DEQ and DMME staff members serve as neutral facilitators and do not take positions, lobby on behalf of the SSWG, or operate in their regulatory capacity. The first meeting of the combined group was April 28 in Charlottesville. I am honored to have been asked to be on the Stakeholder Group and hope that my long experience in the fields of energy regulation, renewable and solar power generation, and the structuring of complex commercial transactions can be of assistance to this important discussion and study.

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